The Federal Board of Revenue (FBR) has made it mandatory for registered taxpayers to issue sales tax invoices when they receive advance payments for future supplies, under procedures notified through SRO 2063 of 2026 on Friday, November 6, 2026.
What happened?
The FBR has notified a revised procedure for accounting for sales tax on advance payments. Registered taxpayers who receive an advance payment against a future supply must now issue a sales tax invoice when the payment is received, and declare the output sales tax in the return for the tax period in which the amount arrives. Each invoice must carry the particulars prescribed under Section 23 of the Sales Tax Act.
Key details
- Where a taxpayer receives multiple advance payments against a single supply, a separate invoice must be issued for each payment, and each invoice must be electronically linked to the earlier ones so the full chain is traceable.
- When the actual supply is made, the taxpayer must issue a final sales tax invoice that references the advance payment invoices. The value and tax already accounted for on the advances will not be counted again, and sales tax on any outstanding amount will be calculated only on the remaining value.
- Advance payments will be taxed at the rate in force when they are received. Any remaining amount will be taxed at the rate applicable on the date of the actual supply.
- The rules also provide for adjustments where advance payments or the value of supplies are increased, reduced or refunded, or where supplies are cancelled in whole or in part. These adjustments will be made under Section 9 of the Sales Tax Act and Rules 19 to 22.
- Taxpayers must electronically link and maintain all advance payment invoices, debit and credit notes, and final sales invoices in the prescribed manner, so each transaction can be identified and cross-referenced.
What it means for people in Pakistan
Businesses that take advance payments — manufacturers, suppliers and service providers, for example — must now invoice and account for sales tax as soon as the money arrives, rather than waiting until the goods are delivered or the service is performed. For buyers, the final invoice should no longer charge tax twice on amounts already taxed at the advance stage. The electronic linking requirement is intended to make each transaction traceable and to reduce disputes over tax already paid.
Source: https://www.techjuice.pk/fbr-makes-sales-tax-invoices-mandatory-for-advance-payments/
